European Commission Framework 7
Notification has been received from HM Revenue & Customs (HMRC) that VAT incurred on EC Framework 7 projects is not recoverable through the VAT system. During the previous framework programmes, Universities were able to recover UK VAT on supplier invoices from HMRC. The EC is still stating that VAT is not an allowable cost and therefore not reimbursing it. This means that academic departments are now responsible for covering the irrecoverable VAT.
We have created an additional VAT code, EU, in Agresso which is FP7 specific and should therefore only be used when raising purchase orders on FP7 projects. This code relates to when either UK VAT or local VAT is payable. This code will charge the VAT to the departmental account code 3994 - irrecoverable VAT.
The overheads earned on the project will continue to be returned to the department so in effect the net benefit to the department will be reduced by the irrecoverable VAT.
I will forward a copy of this memo to all Principal Investigators that have an application submitted or awarded under FP7.
If you have any queries or require further information then please do not hesitate to contact me (firstname.lastname@example.org or on ext 6696).